U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]      Annual report under Section 13 or 15(d) of the Securities Exchange Act 
         of 1934 (Fee required)

For the fiscal year ended March 27, 1998

[ ]      Transition report under Section 13 or 15(d) of the Securities Exchange 
         Act of 1934 (No fee required)

       For the transition period from                                  to

                          Commission file number 0-5278

                                 IEH CORPORATION
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                 (Name of Small Business Issuer in Its Charter)

           New York                                            13-5549348
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(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

140 58th Street, Suite 8E, Brooklyn, New York                      11220
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(Address of Principal Executive Offices)                        (Zip Code)

                                 (718) 492-4440
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                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                                Name of Each Exchange on Which
  Title of Each Class                                     Registered
          None                                               None
----------------------                          ------------------------------- 
          None                                               None
----------------------                          ------------------------------- 

Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.50 Par Value
--------------------------------------------------------------------------------
                                (Title of Class)

--------------------------------------------------------------------------------
                                (Title of Class)
<PAGE>
         Indicate  by check  mark  whether  the  Registrant:  (1) has  filed all
reports  required to be filed by Section 13 or 15(d) of the  Exchange Act during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to  file  such  reports),and  (2) has  been  subject  to  such  filing
requirements for past 90 days.

                            Yes    [X]        No    [ ]

         Indicate by check mark if disclosure  of delinquent  filers in response
to Item 405 of  Regulation  S-B is not  contained in this form,  and will not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The  Registrant's  revenues for its most recent fiscal year ended March
27, 1998 were $4,750,099.

         On June 19,  1998,  the  aggregate  market value of the voting stock of
Registrant  held by  non-affiliates  of Registrant  (consisting of Common Stock,
$.50 par value)  computed  by  reference  to the  closing bid price at which the
stock was sold on such date ($.375 ) was approximately $387,832.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         On June 19, 1998, there were 2,303,502 shares of Common Stock, $.50 par
value, issued and outstanding.



                       DOCUMENTS INCORPORATED BY REFERENCE

         None.
<PAGE>


                                     PART I

Item 1.  Business

         IEH  Corporation   (hereinafter  referred  to  as  the  "Company")  was
organized  under the laws of the State of New York on March 22,  1943  under the
name  Industrial  Heat  Treating  Company,  Inc. On March 15, 1989,  the Company
changed  its name to its  current  name.  The  Company's  executive  offices and
manufacturing facilities are located at 140 58th Street, Suite 8E, Brooklyn, New
York 11220. The Company's  telephone  number is (718) 492-4440. 

The Industry in Which the Company is Engaged

         The  Company is engaged in the  design,  development,  manufacture  and
distribution  of high  performance  electronic  printed  circuit  connectors and
specialized  interconnection devices.  Electronic connectors and interconnection
devices are used to provide connections between electronic component assemblies.
The Company  develops  and  manufactures  connectors  which are  designed  for a
variety  of  high  technological  and  high  performance   applications.   These
connectors are primarily  utilized by those users who require  highly  efficient
and dense (the space between  connection  pins within the connector)  electrical
connections.

         Printed circuit boards in computers contain the components necessary to
perform specific system sub-functions. These functions require connections which
relay information between electronic components and circuit boards, enabling the
commands that are input by the user to be performed.  Electronic connectors,  in
essence,  enable circuit boards and  electronic  components to communicate  with
each other, via direct electrical connection. Connectors also are fundamental to
modular  construction of electronic  assemblies  enabling the  disconnection and
removal of circuit boards and other electronic  components for testing,  repair,
and replacement.

         Connectors may be designed and  manufactured in various  shapes,  sizes
and specifications to meet specific customer requirements and applications. High
performance  connectors are designed to meet various  density and pin count (the
number of individual  connection  points within each connector)  criteria and to
provide low forces (the amount of pressure  needed to make the  connection)  and
electrically efficient connections.

         Constant advances in the design of solid state devices have resulted in
significantly  denser  component  packaging  configurations  on circuit  boards.
Historically,  a 5" X 8"  circuit  board  may have  consisted  of  thousands  of
circuits  with 10 to 30 lines  of  communication.  Under  those  conditions,  an
insertion  force of one pound per  contact for each of the  communication  lines
formed a common and acceptable  standard in connection  devices.  As a result of
technological  developments in recent years,  the same 5" X 8" circuit board may
contain hundreds of thousands of circuits with hundreds of communication  lines,
and an  insertion  force of one (1) ounce per  contact  as the  standard  in the
industry. 
<PAGE>
The Company's Product Line

         The Company  primarily  manufactures  printed circuit board  connectors
that  meet  military  or  individual  customer  specifications.  Certain  of the
Company's  manufacturing  and sales  involve  the  competitive  bidding  process
because of the military and/or government status of customers.  The Company also
manufactures a line of standard universal  connectors which have common usage in
the high technology and commercial  electronics  industries.  The Company serves
both the  commercial  and military  marketplace,  manufacturing  connectors  for
avionics,  electronics,   satellite,  radar  systems,  test  equipment,  medical
electronics and related industries.

         The Company is continuously  redesigning and adapting its connectors to
keep pace with developments in the electronics  industry,  and has, for example,
developed  connectors  for use with  flex-circuits  which are used in  aerospace
programs, computers,  air-borne communication systems, testing systems and other
areas. The Company also provides engineering services to its customers to assist
in  the  development   and  design  of  connectors  to  meet  specific   product
requirements.

         The  Company's  electronic  printed  circuit  connectors  are  sold  to
original  equipment  manufacturers  and  distributors.  The Company supplies its
connectors to  manufacturers  who  principally  produce and distribute  finished
products as well as to distributors who resell the Company's products.  Prior to
the decrease in military and  government  spending over the last five (5) years,
the Company's  sales were made  primarily to the  government,  military  defense
contractors and aerospace companies. However, since the decrease in military and
government  spending  the  Company  has  modified  its  product  line  so  as to
concentrate its sales efforts to commercial electronics  companies.  The Company
still  continues to market its  connectors  for use in  government  and military
computers;  military  defense  equipment and information  systems;  terrestrial,
airborne and aerospace  communications  products;  avionics and guidance systems
and instrumentation and electronic testing equipment.

         With the continuing downturn in government  contracts over the last few
years,  the  Company  has been  striving  the  past  several  years  to  develop
commercial accounts.

         Management has instituted  several steps to increase  productivity  and
increase sales such as downsizing the labor force, implementing material changes
to make the Company's  products more  competitive  and developing  machinery and
equipment to increase  production rates.  Management  believes these initiatives
have decreased costs and will continue to do so in the near future.

         For the fiscal  year ended  March 27,  1998,  the  Company's  principal
customers included  manufacturers of commercial  electronics products,  military
defense  contractors and  distributors  who service these markets.  Sales to the
commercial  electronics  and military  defense  markets  comprised 27 % and 72%,
respectively,  of the  Company's  net sales for the year ended  March 27,  1998.
Approximately  1% of the  Company's net sales for the year ended March 27, 1998,
were made directly to the federal government. 
<PAGE>
New Product Development

         The  Company  maintains  a  program  to  increase  the  efficiency  and
performance of its  connectors to meet  anticipated  and specific  market needs.
Computer and electronics  technology is  continuously  changing and requires the
redesign and development of connectors to adapt to these changes. Primarily, new
technology  has  dictated  a  decrease  in the  size of solid  state  electronic
components  and  smaller  and denser  high  performance  connectors.  Management
believes that a key ingredient to the Company's success is its ability to assist
customer with a new design effort and prepare  necessary  drawing  packages in a
short period of time.  After the customer  approves the design,  prototypes  are
built,  approved by the customer and production is released.  As an example, six
new connectors have been introduced to a major commercial account. The Company's
design  effort  on this  product  line  began  mid-year  1994  and was  recently
completed.  The new development  process with this commercial client has lead to
substantial  repeat  business in the past fiscal  year.  The Company now has the
ability to introduce this line to other commercial accounts.

         The  Company  has  also  recently  commenced   production  of  two  new
connectors for the aerospace  industry.  To date early orders for pre-production
units  have  been  completed  and  the  Company  is  awaiting   commencement  of
production.

         One of the nation's leading radar system  manufacturers  has contracted
with the Company for six new  designs.  The design work is  complete,  approvals
have been  obtained,  and the  Company  is now in small  scale  production.  The
Company  anticipates full scale production when the radar system is released for
sale by the customer.  During fiscal year 1996, the company's business with this
customer doubled from the previous fiscal year.

         Several  years ago, the Company has recently  designed and  developed a
form of compliant termination connector, which is named, "COMTAC". This product,
which utilizes technology known as "Solderless Pin Technology", does not require
the  soldering of  connector  pins,  but instead  utilizes a spring type locking
system in attaching the connector to the printed circuit board.  This technology
was patented in the United States under patent No. 4,720,268 and assigned to the
Company on January  19,1988.  During  fiscal  year ended March 27, 1998 sales of
COMTAC  connectors  accounted  for over 10 % of the Company's  total sales.  The
Company  has  sent  to  certain  of  its  customers   and  potential   customers
pre-production  units for  evaluation.  Although  there can be no  assurance  of
future sales, the Company is optimistic that this new technology will lead to an
increase in sales.

         In connection  with  relocation  of the Company's  facilities in August
1991,  the City of New York  granted  the Company  utility  and tax  incentives.
Additionally,  in July 1992, the New York State Urban Development Corp.  ("UDC")
loaned the Company $435,000.  The loan is repayable over a ten (10) year period,
with interest rates progressively  increasing from 3% to 8% over the term of the
loan. The loan proceeds were used to finance  construction and renovation of the
new  facility.  As of March 27,  1998,  principal  due under  this loan  equaled
$285,916.  As of its fiscal year ended April 1, 1994, the Company failed to meet
the tangible net worth covenant as well as other financial  covenants  contained
in this loan  agreement and to date remains in default of this loan agreement as
a result thereof.  The Company has previously  obtained waivers from the UDC for
this breach of loan covenant.  The Company has requested an additional waiver of
this covenant from the UDC for additional  periods of time. To date, the Company
has not obtained such a waiver nor has the UDC declared a default.  There can be
no  assurance  that the  Company  will be able to  obtain  a waiver  of the loan
covenant or that the UDC will not declare a default of the loan.
<PAGE>
         As of March 27,  1998,  the Company was in arrears  with respect to the
Health & Welfare Fund and Pension Funds  (together,  the "Union Funds") which it
is required to maintain under its labor  agreements  with the United  Automobile
Workers Local 259 (the "Union").  In December 1993, the Company reached a verbal
understanding  with the Union  pursuant to which the Company agreed to a payment
schedule to make current its  obligations  under the Union Funds. At December 1,
1993,  the Company owed  $388,777 to the Health & Welfare  Funds and $129,286 to
the Pension Fund.  Pursuant to the  understanding  the Company had agreed to pay
$10,000 per month  until the total debt in arrears has been paid in full.  As of
March 27,  1998,  the amount in  arrears  with  respect  to the Union  Funds was
$230,827.  There can be no  assurance  that the Company will be able to meet its
obligations, in full or in part, in accordance with this understanding.

         On June 30, 1995, the Company applied to the Pension  Benefit  Guaranty
Corporation   ("PBGC")   to  have  the  PBGC   assume   all  of  the   Company's
responsibilities  and liabilities  under its Salaried Pension Plan. On April 26,
1996,  the Company was notified that the PBGC had granted the Company's  request
and agreed to assume the Company's  obligations under the Salaried Pension Plan.
The PBGC  has not  issued a final  accounting  and  order  with  respect  to the
Salaried  Pension  Plan.  It is  possible  that the PBGC will  require  that the
Company make future payments to PBGC.

Marketing and Sales

         The  market for  connectors  and  interconnect  devices,  domestic  and
worldwide, is highly fragmented as a result of the manufacture by many companies
of a multitude of different  types and  varieties  of  connectors.  For example,
connectors include: printed circuit,  rectangular I/O, circular, planar (IOC) RF
coax, IC socket and fiber optic.  The Company has been  servicing a niche in the
market by manufacturing HYPERTAC(TM) connectors and innovative  Company-designed
printed  circuit  connectors  such as the  Comtac  connectors.  Previously,  the
Company was one of only three licensed  manufacturers of the HYPERTAC(TM) design
in the United States.  In fiscal year 1996,  the Company  learned that the other
two licensees had merged.  Moreover,  the Company, based upon advice of counsel,
determined that the HYPERTAC technology was no longer protected by a patent, and
therefore  was in the public  domain.  As a result,  the  Company  notified  the
licensor that it would no longer be bound by the terms of its license  agreement
and the Company ceased making  license  payments.  See Financial  Statements and
Notes thereto. The Company has received a brief notice from the licensor that it
disputed the Company's interpretations and demanded return of certain equipment.
No legal  proceedings  have been  instituted by the licensor and the Company has
not received any further notices. The Company does not anticipate  manufacturing
other types of connectors in the immediate  future.  The Company is continuously
experimenting with innovative  connection  designs,  which may cause it to alter
its  marketing  plans in the future if a market  should  develop  for any of its
current or future innovative designs.

         The Company's products are marketed to original equipment manufacturers
directly and through  distributors  serving primarily the government,  military,
aerospace and commercial  electronics  markets.  The Company is also involved in
developing  new  connectors  for  specific  uses which  result  from  changes in
technology.  This includes the COMTAC connectors.  The Company assists customers
in the development and design of connectors for specific customer  applications.
This service is marketed to customers who require the  development of connectors
and  interconnect  devices  specially  designed to accommodate the customers own
products.
<PAGE>
         The  Company  is  primarily  a   manufacturer   and  its  products  are
essentially   basic   components  of  larger   assemblies  of  finished   goods.
Approximately  95% of the Company's net sales for the years ended March 27, 1998
and  March 28,  1997,  respectively,  were made  directly  to  manufacturers  of
finished   products  with  the  balance  of  the  Company's   products  sold  to
distributors.  Distributors  often purchase  connectors for customers who do not
require large  quantities  of connectors  over a short period of time but rather
require small allotments of connectors over an extended period of time.

         Two (2) of the  Company's  customers  accounted  for 30% and 33% of the
Company's  net sales  for the years  ended  March 27,  1998 and March 28,  1997,
respectively.  One of the  Company's  customers  accounted for 12% and 8% of the
Company's  sales  for the  years  ended  March  27,  1998  and  March  28,  1997
respectively.

         The Company currently employs 16 independent sales  representatives  to
market its products in all regions in the United States. These independent sales
representatives   also   promote   the  product   lines  of  other   electronics
manufacturers;  however,  they do not promote the product  lines of  competitors
which compete directly with the Company's products.  These sales representatives
accounted  for  approximately  94% of Company sales (with the balance of Company
sales being generated via direct customer  contact) for the year ended March 27,
1998.

         International  sales  accounted for less than l% of sales for the years
ended March 27, 1998 and March 28, 1997.

Backlog Of Orders/Capital Requirements

         The  backlog  of  orders  for  the  Company's   products   amounted  to
approximately  $1,300,000  at March 27, 1998, as compared to $1,200,000 at March
28,  1997.  At June  15,  1997,  the  backlog  had  increased  to  approximately
$1,400,000. A significant portion of these orders are subject to cancellation or
postponement  of delivery dates and,  therefore,  no assurance can be given that
actual sales will result from these  orders.  The  estimated  funds  required to
manufacture the current backlog of orders is estimated at $450,000.  The Company
does not foresee any problems which would prevent it from fulfilling its orders.

Competition

         The design,  development,  manufacture  and  distribution of electrical
connectors  and  interconnection  devices  is a highly  competitive  field.  The
Company  principally  competes  with  companies  who  produce  high  performance
connectors in printed  circuits and wireboards for high  technology  application
which includes Hypertronics Corporation and Si-Tac Connectors,  Inc. The Company
competes with respect to their  abilities to adapt certain  technologies to meet
specific product applications; in producing connectors cost-effectively;  and in
production  capabilities.  In  addition,  there  are many  companies  who  offer
connectors  with designs similar to those utilized by the Company and are direct
competitors of the Company.
<PAGE>
         The  primary   basis  upon  which  the  Company   competes  is  product
performance and production capabilities. The Company usually receives job orders
after submitting bids pursuant to  customer-issued  specifications.  The Company
also offers  engineering  services to its customers in designing and  developing
connectors for specialized  products and specific  customer  applications.  This
enables the Company to receive a competitive  advantage over those companies who
basically  manufacture   connectors  based  solely  or  primarily  on  cataloged
specifications.  Many  of  the  Company's  competitors  have  greater  financial
resources,  market penetration and experience than the Company and no assurances
can be given that the  Company  will be able to compete  effectively  with these
companies in the future.

Suppliers of Raw Materials and Component Parts

         The  Company  utilizes  a variety  of raw  materials  and  manufactured
component parts which it purchases from various  suppliers.  These materials and
components are available from numerous  sources and the Company does not believe
that it will have a problem obtaining such materials in the future. However, any
delay in the Company's  ability to obtain  necessary raw materials and component
parts may affect its ability to meet customer  production needs. In anticipation
of such delays, the Company carries an inventory of raw materials and components
parts to avoid shortages and to insure continued production.

Engineering/Research & Development

         The Company provides personalized engineering services to its customers
by designing  connectors for specific customer  applications.  The employment of
electromechanical  engineers is the  anticipated  cornerstone  of the  Company's
future growth.  The Company  maintains a testing  laboratory where its engineers
experiment  with new connector  designs based on changes in technology and in an
attempt to create innovative, more efficient connector designs.

         The  Company  expended an  estimated  $69,500 and $57,600 for the years
ended  March 27, 1998 and March 28,  1997,  respectively,  on Company  sponsored
research and development  activities relating to the development of new designs,
techniques and the  improvement of existing  designs.  In addition,  the Company
received  revenues of $103,800  and  $129,000 for the years ended March 27, 1998
and March 28,  1997,  respectively,  pursuant  to  customer  sponsored  research
activities.

Employees

         The Company presently employs approximately 65 people, four (4) of whom
are executive officers;  three (3) are engaged in management  activities;  three
(3) provide general administrative services and approximately 55 are employed in
manufacturing and testing activities. The employees engaged in manufacturing and
testing  activities  are covered by a collective  bargaining  agreement with the
United Auto Workers of America,  Local 259 (the  "Union")  which expired on July
31, 1995 and was extended  until March 31, 1996. On April 1, 1996, the Union and
the Company  negotiated a new  contract  which  expires on March 31,  1999.  The
Company  believes  that it has a good  relationship  with its  employees and the
Union.
<PAGE>
Patents and Licenses

         Electrical  connectors  and  interconnection  devices  are  usually the
subject of standard designs,  therefore, only innovations of standard designs or
the  discovery  of a new  form of  connector  are  patentable.  The  Company  is
continuously  attempting  to develop new forms of  connector or  adaptations  of
current connector designs in an attempt to increase performance and decrease per
unit costs.  The Company has developed and designed the COMTAC  connector  which
was patented on January 19,  1988,  at which time the patent was assigned to the
Company.

Governmental Regulations

         The Company is subject to federal  regulations  under the  Occupational
Safety and Health Act ("OSHA") and the Defense Electric Supply Command ("DESC").
OSHA provides  federal  guidelines and  specifications  to companies in order to
insure the health  and  safety of  employees.  DESC  oversees  the  quality  and
specifications  of  products  and  components   manufactured  and  sold  to  the
government  and  the  defense  industry.  Although  DESC  continuously  requires
suppliers to meet changing  specifications,  the Company has not encountered any
significant  problems meeting such  specifications and its products have, in the
past, been approved.  The Company is unaware of any changes in the  government's
regulations which are expected to materially affect the Company's business. 

Item 2. Properties

         In August 1991,  the Company  relocated  its offices and  manufacturing
facilities to the Brooklyn Army Terminal at 140 58th Street,  Brooklyn, New York
pursuant  to a lease  agreement  with the New  York  City  Economic  Development
Corporation.  This  facility  occupies one floor of an eight (8) story  concrete
building and includes the Company's executive and administrative offices as well
as its manufacturing facilities.  The manufacturing facilities include a tooling
and machine  shop, a plating  operation  and a testing  laboratory.  The Company
leases approximately 40,000 feet of space, of which it estimates;  10,000 square
feet are used as executive, sales and administrative offices; 22,000 square feet
are used for its  manufacturing  and plating  facilities;  4,000 square feet are
used for its laboratory facilities;  and 4,000 square feet are used as warehouse
space.  The  premises  are  occupied by the Company  under a ten (10) year lease
agreement  dated August 23, 1991.  The  Company's  net rent expense for the year
ended March 27, 1998. was $210,041 . The basic rent under the lease agreement is
approximately  $194,236 per year for the balance of the term of the lease except
for the last year, in which the rent  increased to $274,630.  In addition to the
base rent,  the Company pays real estate taxes,  insurance  premiums and utility
charges relating to the use of the premises.  The Company  considers its present
facilities  to be adequate for its present and  anticipated  future  needs.  See
"Legal  Proceedings"  for certain  matters  involving  the  Company's  operating
facility and offices.

Item 3.  Legal Proceedings

         The  Company is not a party to or aware of any  pending  or  threatened
legal  proceedings  which would  result in any  material  adverse  effect on its
operations or its financial condition.
<PAGE>
         As  previously  reported,  the Company  reached an  agreement  with its
landlord, the New York Urban Development Corporation ("NYUDC") to settle certain
matters  related to the lease of its principal  offices  located in Brooklyn New
York, including a lawsuit brought by the NYUDC against the Company. The lawsuit,
entitled New York City Economic Development Corporation against IEH Corporation,
had been  commenced  in the Civil  Court of the City of New York,  Kings  County
(Index No. L&T  88890/97).  The NYUDC  claimed  that IEH had not paid the proper
rent due under its lease for the period from  September  1, 1992  through  April
1997.  The NYUDC  claimed  damages of $236,000  plus  interest of  approximately
$41,000.

         The  Company  determined  it was in its best  interest  to  settle  the
lawsuit.  The parties agreed to a settlement,  effective as of May, 1997 whereby
the Company  agreed to a  repayment  schedule  for the amount due  payable  with
interest at 8.25% per year. The monthly  installments equal approximately $5,790
per month.  The settlement  provides for the entry,  following notice and a cure
period,  of a default  judgement by the NYUDC in the event the Company  fails to
timely pay amounts due under the lease and the settlement.

Item 4.  Submission of Matters to Vote of Security Holders

         No matters were submitted to shareholders during the fourth quarter for
the fiscal year ended March 27, 1998.
<PAGE>
                                     PART II

Item 5.  Market For Common Equity and Related Stockholder Matters

Principal Market

         The Common Stock of the  Registrant  (the "Common  Stock") is traded in
the  Over-The-Counter  Market  and is  quoted  on the  National  Association  of
Securities  Dealers Automated  Quotation  ("NASDAQ") System Bulletin Board under
the symbol "IEHC".  On January 11, 1993, the Company's  Common Stock was deleted
from  listing on the NASDAQ  SmallCap  Market  System  because of the  Company's
failure to maintain the minimum asset and shareholders equity  requirements.  On
January  12,  1993,  the  Company's  Common  Stock  was  first  quoted  over the
Electronic Bulletin Board (OTCBB).

Market Information

         The range of high and low bid prices for the  Company's  Common  Stock,
for the periods  indicated as set forth  below.  For the period prior to October
29,  1991,  the  Company was listed on the NASDAQ  National  Market  System.  On
October 29,  1991,  the  Company's  Common  Stock was  delisted  from the NASDAQ
National  Market  System and from  October  29, 1991 to January  11,  1993,  the
Company's  Common  Stock was listed on the NASDAQ  SmallCap  Market  System.  On
January 11, 1993, the Company's  Common Stock was delisted from the NASDAQ Small
Cap Market System and on January 13, 1993, the Company's  Common Stock was first
quoted over the Electronic  Bulletin  Board (OTCBB).  Set forth below is a table
indicating  the high and low bid prices of the Common  Stock  during the periods
indicated.
<PAGE>
<TABLE>
<CAPTION>
            Year                            High Bid                    Low Bid
            ----                            --------                    -------
<S>                                          <C>                         <C>   
Fiscal Year ended March 27, 1998(1)
1st Quarter                                  .1565                       .15625
2nd Quarter                                  .25                         .15625
3rd Quarter                                  .25                         .25
4th Quarter                                  .3125                       .25

Fiscal Year ended March 28, 1997(1)

1st Quarter                                  .135                        1/16
2nd Quarter                                  3/16                        1/16
3rd Quarter                                  1/16                        1/32
4th Quarter                                  1/8                         1/32

</TABLE>
(1)  As reported by the OTCBB.

         The above quotations, as reported, represent prices between dealers and
do not include retail mark-up, mark-down or commissions.  Such quotations do not
necessarily represent actual transactions.

         On June 23, 1998 the high bid for the Common  Stock was 5/8 and the low
bid was 3/8.
<PAGE>
Dividends

         The Company has not paid any cash  dividends on its Common Stock during
the last five (5) fiscal  years.  At present,  the Company  does not  anticipate
issuing any cash  dividends  on its Common  Stock in the  foreseeable  future by
reason of its contemplated future financial requirements and business plans. The
Company will retain  earnings,  to the extent that there are any, to finance the
development of its business.

Approximated Number of Equity Security Holders

         The number of record  holders of the Company's  Common Stock as of June
19, 1998 was  approximately  1,252.  Such number of record owners was determined
from the  Company's  stockholder  records,  and does not include the  beneficial
owners of the  Company's  Common  Stock  whose  shares  are held in the names of
various security holders, dealers and clearing agencies.
<PAGE>
Item 6.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations

Results of Operations

         The following table sets forth for the periods  indicated,  percentages
for certain  items  reflected  in the  financial  data as such items bear to the
revenues of the Company:
<TABLE>
<CAPTION>
                         Relationship to Total Revenues


                                                March 27, 1998     March 28, 1997

<S>                                                <C>                 <C>   
Operating Revenues (in thousands)                  $4,750              $4,729

Operating Expenses:
  (As a percentage of Operating Revenues)

        Costs of Products Sold                       72.1%               72.6%

         Selling, General and Administrative         17.6%               16.1%

         Interest Expense                             2.4%                3.2%

         Depreciation and amortization                5.6%                5.7%

                 TOTAL COSTS AND EXPENSES            97.7%               97.6%

Operating Income (loss)                               2.3%                2.4%

Other Income                                           .0%                 .0%

Income (loss) before Income Taxes                     2.3%                2.4%

Income Taxes                                          (.3%)               (.2%)

Net Income (loss)                                     2.0%                2.2%
</TABLE> 
<PAGE>
Year End Results: March 27, 1998 vs. March 28, 1998

     Operating revenues for the year ended March 27, 1998 amounted to $4,750,099
reflecting a .1% increase  versus prior year 1997  revenues of  $4,729,277.  The
increase in  revenues,  though  marginal,  is a direct  result of the  Company's
continuing  efforts to redirect its sales efforts to the  commercial  electronic
market and away from the governmental and military procurement sector.

         Cost of products sold amounted to $3,424,932  for the fiscal year ended
March 27, 1998, or 72% of operating  revenues.  This reflected a decrease of .1%
in the cost of products sold from $3,433,204 or 72.6% of operating  revenues for
the fiscal  year ended  March 28,  1997.  This  decrease,  though  marginal,  is
primarily due to management's efforts to control manufacturing costs.

         Selling,  general  and  administrative  expenses  were  $  835,025  and
$760,432 or 17.6% and 16.1% of  operating  revenues  for the fiscal  years ended
March 27,  1998 and March 28,  1997,  respectively.  This  category  of  expense
increased  9.8% from the prior year. The increase can be attributed to increased
variable expenses which are reflective of increased sales.

         Interest  expense was $116,104 for the fiscal year ended March 27, 1998
or 2.4% of  operating  revenues.  For the  fiscal  year  ended  March 28,  1997,
interest  expense was  $149,735 or 3.2% of operating  revenues.  The decrease of
22.5% reflects  decreased interest rates in fiscal 1998 as compared to the prior
year.

         Depreciation and amortization of $268,173 or 5.6% of operating revenues
was reported for the fiscal year ended March 27, 1998. This reflects an decrease
of 1.7%  from the  prior  year  ended  March  28,  1997 of  $272,894  or 5.7% of
operating  revenues.  The decrease is a result of reduced levels of acquisitions
of new plant and equipment.

         The Company reported net income of $95,651 for the year ended March 27,
1998  representing  basic income of $.042 per share as compared to net income of
105,709  or $.05 per share for the year  ended  March 28,  1997.  The net income
decrease for the current year can in part be  attributed to an increase of 22.5%
in selling, general and administrative expenses over the prior year. 

Liquidity and Capital Resources

         The  Company  reported  working  capital of  $102,821  as compared to a
working  capital  deficit of $61,543 at March 28, 1997.  The increase in working
capital of $164,364 was attributable to the following items:


    Net income (loss) (excluding depreciation and amortization)  $ 263,824
    Capital expenditures                                          (192,957)
    Other transactions                                              (6,503)


         As a result of the above,  the current ratio (current assets to current
liabilities)  was 1.1 to 1 at March 27,  1998 as compared to .97 to at March 28,
1997.  Current  liabilities  at March  27,  1998  were  $1,742,860  compared  to
$1,918,911  at March 28,  1997.  This  decrease is  primarily  reflective  of an
increase in accounts receivable as well as a decrease in accounts payable.
<PAGE>
         The Company expended $192,957 in capital expenditures in fiscal 1998 as
against depreciation of $268,173 for the year ended March 27, 1998.

         The net income of $95,651 for the year ended  March 27, 1998  increased
stockholders' equity to $655,033 as compared to stockholders' equity of $559,382
at March 28, 1997.

         The Company  has an  accounts  receivable  financing  agreement  with a
factor which bears  interest at 2.5% above  prime.  At March 27, 1998 the amount
outstanding was $656,015 as compared to $536,457 at March 28, 1997.

         As of March 27, 1998 and as of March 28,  1997,  the Company  failed to
meet the tangible net worth  covenant  contained in its loan  agreement with the
Urban Development  Corporation  ("UDC").  The Company has not been in compliance
with this ratio since  fiscal year 1994.  The Company  received a waiver of this
covenant  from the UDC for the period  ending  March 31,  1994.  The Company has
requested a continued  waiver from the UDC. To date, the UDC has not declared an
event of default.  The Company has been notified that the loan was recently sold
by UDC to a third party.  There are no assurances  that the Company will receive
any additional waivers of this covenant and therefor,  the Company may be deemed
to be in noncompliance with its loan obligation to the UDC. 

Effects of Inflation

         The Company  does not view the effects of  inflation to have a material
effect upon its  business.  Increases in costs of raw  materials and labor costs
have been offset by increases in the price of the Company's products, as well as
reductions in costs of production, reflecting management's efforts in this area.
While the  Company has in the past  increased  its prices to  customers,  it has
maintained  its  relative  competitive  price  position.  However,   significant
decreases  in  government,  military  and  military  subcontractor  spending has
provided excess production  capacity in the industry which in turn has tightened
pricing margins.

Item 7.  Financial Statements

         See Index to Financial Statements attached hereto.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         The Company had no disagreements  with its accountants  during the last
two fiscal years.
<PAGE>
                                    PART III  

Item 9.  Directors, Executive Officers, Promoters and Control
         Persons; Compliance with Section 16(a) of the Exchange Act

         The executive officers and directors of the Company are as follows:

   Name                       Age                  Office
   ----                       ---                  ------
Michael Offerman              57         Chairman of the Board of
                                          Directors and President

Ralph Acello                  61         Vice-President - Production
                                          and Director

Robert Knoth                  56         Secretary and Treasurer

Murray Sennet                 75         Director

Allen Gottlieb                57         Director

Robert Pittman                73         Director

Joan Prideaux                 65         Vice President - Sales and Marketing



  All  Directors  serve for a term of two years and until their  successors  are
duly elected. All officers serve at the discretion of the Board of Directors.

Executive Officers and Directors

         Michael  Offerman  has been a member  of the Board of  Directors  since
1973. In May,  1987, Mr.  Offerman was elected  President of the Company and has
held that  position  since  that  date.  Prior to his  becoming  President,  Mr.
Offerman served as Executive Vice-President of the Company.

         Ralph Acello has been a member of the Board of Directors since 1988. In
August, 1984, Mr. Acello was elected the Company's  Vice-President of Production
and has held the position since that date.

         Robert Knoth joined the Company as Controller in January,  1990 and was
elected  Treasurer  of the  Company in March,  1990.  Mr.  Knoth was  elected as
Secretary  of the  Company  in  September  1992 and Mr.  Knoth  has  held  these
positions since said dates.  From 1986 to January,  1990, Mr. Knoth was employed
as  controller  by G&R  Preuss,  Inc.,  a company  engaged  in the  business  of
manufacturing truck bodies and accessories.

         Murray  Sennet has been a member of the  Company's  Board of  Directors
since 1970.  Mr.  Sennet was the  Secretary  and Treasurer of the Company at the
time of his retirement in April, 1986.

         Allen  Gottlieb has been a member of the  Company's  Board of Directors
since 1992. Mr. Gottlieb has been an attorney in private  practice for over five
(5) years.
<PAGE>
         Robert Pittman has been a member of the Board of Directors  since 1987.
Mr.  Pittman  retired in October 1992, at which time he had held the position of
Vice-President of Engineering and Secretary of the Company.

         Joan  Prideaux  joined the  Company  in July,  1995 as  National  Sales
Manager. Prior to such time Ms. Prideaux was employed as an account executive of
Viking Connectors for the previous five years.
 
Significant Employees

         Thomas Hunt is the director of Quality Control,  a position he has held
since  October,  1992.  Mr. Hunt  joined the  Company in 1987 as the  laboratory
director and senior  inspector  and held such  positions  until his promotion in
October, 1992.

         Stephen  Reich is the  Director of  Purchasing,  a position he has held
since July 1995.  Prior to joining the  Company,  Mr. Reich owned and operated a
retail business. lawrence Schwartz is the Quality Control manager, a position he
has held since July 1997. Mr. Schwartz was employed by Precision International a
manufacturing compnay of automotive parts.

Certain Reports

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors and officers and persons who own,  directly or  indirectly,
more than 10% of a registered class of the Corporation's  equity securities,  to
file with the Securities and Exchange  Commission  ("SEC")  reports of ownership
and  reports  of  changes  in  ownership  of  Common  Stock of the  Corporation.
Officers,  directors and greater than 10%  shareholders  are required to furnish
the Company  with  copies of all Section  16(a)  reports  that they file.  Based
solely on review of the copies of such  reports  received  by the  Company,  the
Company believes that filing requirements applicable to officers,  directors and
10%  shareholders  were complied with during the fiscal year. 

Item 10. Executive Compensation

         The following table sets forth below the summary  compensation  paid or
accrued by the  Corporation  during the fiscal years ended March 27,  1998,March
28, 1997 and March 29, 1996 for the Corporation's Chief Executive Officer:
<TABLE>
<CAPTION>
                                                                                     Other Annual
    Name and Principal Position               Year           Salary       Bonus      Compensation
                                              ----           ------       -----      ------------
<S>                                      <C>                 <C>            <C>           <C>     

Michael Offerman, Chief                  March 27, 1998      $100,000       -             0
Executive Officer, President(1)          March 28, 1997        92,404       -             0 
                                         March 29, 1996        86,875       -             0
</TABLE>
<PAGE>
(1)      During the years  ended  March 27,  1998,  March 28, 1997 and March 29,
         1996  , and  the  Corporation  provided  automobile  allowances  to Mr.
         Offerman.  This does not include the aggregate  incremental cost to the
         Corporation   of  such   automobile  or  automobile   allowances.   The
         Corporation  is unable to  determine  without  unreasonable  effort and
         expense the specific amount of such benefit,  however,  the Corporation
         has concluded that the aggregate  amounts of such personal  benefit for
         Mr.  Offerman  does  not  exceed  $25,000  or 10%  of the  compensation
         reported as total salary and bonus reported. Effective January 1, 1995,
         Mr. Offerman  entered into an employment  agreement with the Company to
         increase his salary to $100,000 per annum.  Mr.  Offerman  agreed that,
         not withstanding the terms of his new employment agreement, he was paid
         at the rate of $92,404 for fiscal1997.  Commencing  September1997,  Mr.
         Offerman began receiving his salary at the rate of $100,000 per year.
 
         See  "Employment  Agreements".  No  other  officer  of the  Corporation
         received  compensation  (salary and bonus) in excess of $100,000 during
         the fiscal  years ended  March 27,  1998  orMarch 28, 1997 or March 29,
         1996.

Pension/Benefit Incentive Plan

         In 1964, the Corporation's  Shareholders and Board of Directors adopted
a contributory  pension plan (the "Salaried  Pension Plan")  effective  April 1,
1964, for salaried  employees of the  Corporation.  The Salaried Pension Plan as
revised  on April 1,  1987,  provides  for  retirement  benefits  for  qualified
employees  upon or prior to  retirement.  For early  retirement,  employees  are
eligible to receive a portion of their  retirement  benefits,  starting 10 years
prior to the  employees  anticipated  normal  retirement  date (age 65),  if the
employee has completed l5 years of service to the  Corporation.  The employee is
eligible to receive reduced retirement  benefits based on an actuarial table for
a period  not  exceeding  ten  (l0)  years or his  lifetime.  In no event  would
benefits exceed $12,000 per year.

         For normal  retirement  at the age of  sixty-five  (65) the employee is
entitled to receive full retirement benefits for a period not exceeding ten (10)
years or his lifetime.  If the employee should die prior to the ten year period,
his beneficiaries will continue to receive the full benefit for the remainder of
the ten year term. In no event will benefits exceed $12,000 per year.

         If payment is made on the "joint and survivor  basis" as elected by the
employee, benefits will be provided to both the employee and spouse on a reduced
basis over the life of both the employee and his spouse.  If the employee should
die prior to the  guaranteed  ten year  period,  the  spouse  will  receive  the
employee  benefit for the  remainder of the term,  after which,  the spouse will
receive the reduced spousal benefit for the life of the spouse. In no event will
the benefits pursuant to the joint and survivor basis exceed $12,000 per year.

         In June,  1995, the Company  applied to the Pension  Benefit  Guarantee
Corporation  for a distress  termination of the Salaried  Pension Plan. The PBGC
has notified  the Company  that it has agreed to take over the Salaried  Pension
Plan.  The PBGC has not issued its final order and may require  that the Company
enter into an agreement to make future payments to the PBGC.
<PAGE>
         Under an agreement dated June 16, 1978, the Corporation  entered into a
retirement  compensation  agreement with Michael  Offerman,  which provides that
upon  reaching  the age of 65, or the  earlier of death,  total  disability,  or
employment  termination by mutual consent,  Michael  Offerman or his beneficiary
would be  entitled  to  retirement  payments of $30,000 per year for a period of
five years.
 
Employment Agreements

         In  August,  1995,  the  Board of  Directors  approved  the terms of an
employment  agreement with Michael  Offerman,  its President and Chairman of the
Board.  Effective as of January 1, 1995, the terms of the  Employment  Agreement
provide that Mr. Offerman's salary will be $100,000 per year and that he will be
employed as President of the Company until a term expiring on December 31, 1999.
Mr. Offerman agreed to defer the increase in his salary from the previous year's
rate of  compensation  ($86,875)  until  October 20, 1995 and further  agreed to
receive  only  $92,404  in salary  for the  fiscal  year  endedMarch  28,  1997.
Commencing in  September1997,  Mr. Offerman began receiving  compensation at the
rate of  $100,000  per year in  accordance  with his  employment  agreement.  As
further provided under the terms of the Employment  Agreement,  the Company will
provide  certain  benefits  such as health  benefits  and the use of a full size
automobile  during the term.  The  Company  also agreed to pay the premium for a
$150,000 term life insurance policy payable to Mr.  Offerman's  beneficiary.  In
the event the Company declines to enter into a new employment agreement with Mr.
Offerman  at the  expiration  of his term,  the  Company  has  agreed to pay Mr.
Offerman the sum of $75,000.  Additionally,  in the event there occurs a "change
of control" of the Company,  and within the one (1) year period  thereafter  Mr.
Offerman's  employment is terminated  or he resigns,  then Mr.  Offerman will be
entitled  to  receive  a sum equal to the  balance  of his base  salary  for the
remainder of the term plus $75,000. A "change of control" is defined to mean (i)
a person  becomes the holder of 30% or more of the combined  voting power of the
Company's outstanding  securities (ii) the stockholders of the Company approve a
merger  or  consolidation  whereby  the  Company's  voting  securities  fail  to
represent,  after such  merger or  consolidation,  at least  50.1% of the voting
securities  of the  surviving  entity.  Additionally,  in the event the  Company
relocates outside of the New York City  Metropolitan  area, it has agreed to pay
Mr. Offerman the sum of $75,000.

         In  August,  1995,  the  Board of  Directors  approved  the terms of an
employment agreement with Ralph Acello, its Vice President-Production. Effective
as of January 1, 1995,  the terms of the Employment  Agreement  provide that Mr.
Acello's  salary  will be $61,300  per year and that he will be employed as Vice
President-Production  of the Company until a term expiring on December 31, 1999.
As further  provided  under the terms of the Employment  Agreement,  the Company
will provide certain benefits such as health benefits and the use of a full size
automobile  during the term.  The  Company  also  agreed to pay the premium of a
$150,000 term life insurance policy payable to Mr. Acello's beneficiary.  In the
event the Company  declines to enter into a new  employment  agreement  with Mr.
Acello at the  expiration of his term,  the Company has agreed to pay Mr. Acello
the sum of  $45,975.  Additionally,  in the  event  there  occurs a  "change  of
control"  of the  Company,  and within the one (1) year  period  thereafter  Mr.
Acello's  employment  is  terminated  or he  resigns,  then Mr.  Acello  will be
entitled  to  receive  a sum equal to the  balance  of his base  salary  for the
<PAGE>
remainder of the term plus $45,975. A "change of control" is defined to mean (i)
a person  becomes the holder of 30% or more of the combined  voting power of the
Company's outstanding  securities (ii) the stockholders of the Company approve a
merger  or  consolidation  whereby  the  Company's  voting  securities  fail  to
represent,  after such  merger or  consolidation,  at least  50.1% of the voting
securities  of the  surviving  entity.  Additionally,  in the event the  Company
relocates outside of the New York City  Metropolitan  area, it has agreed to pay
Mr. Acello the sum of $45,975.
 
         In  August,  1995,  the  Board of  Directors  approved  the terms of an
employment  agreement  with Robert Knoth.  Effective as of January 1, 1995,  the
terms of the  Employment  Agreement  provide  that Mr.  Knoth's  salary  will be
$59,500 per year and that he will be employed as Secretary and Treasurer until a
term expiring on December 31, 1999. As further  provided  under the terms of the
Employment  Agreement,  the Company will provide certain benefits such as health
benefits.  The Company  also  agreed to pay the premium of a $150,000  term life
insurance  policy payable to Mr. Knoth's  beneficiary.  In the event the Company
declines  to  enter  into a new  employment  agreement  with  Mr.  Knoth  at the
expiration  of his term,  the  Company  has  agreed to pay Mr.  Knoth the sum of
$44,625.  Additionally,  in the event there  occurs a "change of control" of the
Company, and within the one (1) year period thereafter Mr. Knoth's employment is
terminated or he resigns, then Mr. Knoth will be entitled to receive a sum equal
to the balance of his base salary for the remainder of the term plus $44,625.  A
"change of control" is defined to mean (i) a person becomes the holder of 30% or
more of the combined voting power of the Company's  outstanding  securities (ii)
the  stockholders of the Company approve a merger or  consolidation  whereby the
Company's   voting   securities   fail  to  represent,   after  such  merger  or
consolidation,  at least 50.1% of the voting securities of the surviving entity.
Additionally,  in the event the Company  relocates  outside of the New York City
Metropolitan area, it has agreed to pay Mr. Knoth the sum of $44,625.

         In  December  1997,  the Board of  Directors  approved  the terms of an
employment  agreement with Joan Prideaux.  The terms of the employment agreement
provide that Ms. Prideaux's salary will be $57,000 per year and that she will be
employed as Vice President-Sales and Marketing. The agreement is for a period of
five years. As further provided under the terms of the employment agreement, the
Company will provide certain benefits such as health benefits.  The Company also
agreed to pay the premium of a $150,000 term life  insurance  policy  payable to
Ms.  Prideaux's  beneficiary.  In the event the Company declines to enter into a
new employment  agreement  with Ms.  Prideaux at the expiration of the term, the
Company has agreed to pay Ms. Prideaux the sum of $42,750.  Additionally, in the
event there occurs a "change of control" of the Company,  and within the one (1)
year period  thereafter Ms.  Prideaux's  employment is terminated or he resigns,
then she will be  entitled  to  receive a sum equal to the  balance  of her base
salary for the  remainder  of the term plus  $42,750.  A "change of  control" is
defined to mean (i) a person  becomes the holder of 30% or more of the  combined
voting power of the Company's  outstanding  securities (ii) the  stockholders of
the  Company  approve a merger or  consolidation  whereby the  Company's  voting
securities fail to represent, after such merger or consolidation, at least 50.1%
of the voting securities of the surviving entity. Additionally, in the event the
Company relocates outside of the New York City Metropolitan  area, it has agreed
to pay Ms. Prideaux the sum of $42,750.
<PAGE>
Cash Bonus Plan

         In 1987, the Company  adopted a cash bonus plan ("Cash Bonus Plan") for
Executive Officers. Contributions to the Bonus Plan are made by the Company only
after pre-tax  operating  profits exceed $150,000 for a fiscal year, and then to
the extent of 10% of the excess of the  greater  of  $150,000  or 25% of pre-tax
operating profits.  There were no contributions to the Bonus Plan for the fiscal
years ended March 27, 1998,  March 28, 1997 or March 29, 1996.
 
Item 11. Security Ownership of Certain Beneficial
         Owners and Management

         The following table sets forth certain  information as of June 22, 1998
with respect to (i) the persons  (including  any "group" as that term is used in
Section 13(d)(3) of the Securities  Exchange Act of 1934),  known by the Company
to be the  beneficial  owner of more than five  percent (5%) of any class of the
Company's voting  securities;  (ii) each Executive Officer and Director who owns
Common Stock in the Company; and (iii) all Executive Officers and Directors as a
group. As of June 22, 1998,  there were 2,303,502  shares of Common Stock issued
and outstanding.
<PAGE>
<TABLE>
<CAPTION>
                                                        Amount of and Nature
                             Name and Address of            of Beneficial
  Title of Class             Beneficial Owner                Ownership               Percentage of Class
  --------------             ----------------                ---------               -------------------
<S>                          <C>                              <C>                          <C>  
Common Stock $.50            Michael Offerman                 399,784(1)                   17.4%
Par Value                    140 58th Street                                                    
                             Brooklyn, NY  11220                                                
                                                                                                
                             Murray Sennet                      24,500                      1.1%
                             1900 Manor Lane                                                    
                             Plano, TX  75093                                                   
                                                                                                
                             Allen Gottlieb                          0                        0 
                             325 Coral Way                                                      
                             Ft. Lauderdale. FL                                                 
                             33301                                                              
                                                                                                
                             Robert Pittman                     20,000                        * 
                             45 Ocean Avenue                                                    
                             Monmouth Bch, NJ                                                   
                             07750                                                              
                                                                                                
                             Gerard Deiss                                                       
                             16 Rue De La Mart                547,000(2)                   23.7%
                             Chartreuil                                                         
                             6-68 490                                                           
                             Mere Par Montfort                                                  
                             L'Amaury, France                                                   
                                                                                                
                             David Lopez and                   278,000                     12.1%
                             Nancy Lopez                                                        
                             Edge of Woods                                                      
                             P.O. Box 323                                                       
                             Southampton, NY                                                    
                             11968                                                              
                                                                                                 
                             All Officers &                    444,284                     19.3%
                             Directors as a Group                                               
                             (4 in number)                                                      
</TABLE>                        
*  Less than 1%.

(1)  43,600  shares of Common  Stock are jointly  owned by Mr.  Offerman and his
     wife, Gail Offerman.

(2)  These shares are  beneficially  owned by Mr. Deiss through a  Liechtenstein
     trust.

All shares set forth above are directly by the named individual unless otherwise
stated.
<PAGE>
Item 12. Certain Relationships and Related Transactions

         See "Executive Compensation-Employment  Agreements" for a discussion of
the employment agreements between the Company and management.

Item 13. Exhibits, List and Reports on Form 8-K

(a) Exhibits filed with Form 10-KSB:

         See annexed Exhibit index.

(b)  Reports on Form 8-K

         The  Company  did not file any  Reports  on Form  8-K  during  the last
quarter of the period covered by this Report.
<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                     IEH CORPORATION

                                             By:     /s/ Michael Offerman
                                                     --------------------
                                                     Michael Offerman, President
Dated:   June 24, 1997


         Pursuant to the  requirements  of the Securities  Exchange Act of l934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


/s/Michael Offerman                                               June 24, 1997
-------------------
Michael Offerman, Chairman of the
Board and President

/s/Ralph Acello                                                   June 24, 1997
---------------
Ralph Acello
Vice President and Director

/s/Robert Knoth                                                   June 24, 1997
---------------
Robert Knoth, Secretary and
Treasurer

/s/Murray Sennet                                                  June 24, 1997
----------------
Murray Sennet, Director


/s/Robert Pittman                                                 June 24, 1997
-----------------
Robert Pittman, Director
<PAGE>
                                  EXHIBIT INDEX

         The following  Exhibits have  previously been filed with the Securities
and Exchange  Commission and, pursuant to 17 C.F.R. Secs. 201.24 and 240.12b-32,
are incorporated by reference to the document  referenced in brackets  following
the descriptions of such Exhibits.  Those Exhibits designated by an asterisk (*)
are filed herewith.


Exhibit No.                               Description
-----------                               -----------
                                                     
3.1                 Amended and Restated  Certificate  of  Incorporation  of the
                    Company  [Exhibit  C-4 to Current  Report filed on From 8-K,
                    dated February 27, 1991].

3.2                 By-Laws of the  Company  Filed as  Exhibit  3.2 on Report on
                    Form 10-KSB for the fiscal year ended March 27, 1994.

4.1                 Form of  Common  Stock  Certificate  of  Company.  Filed  as
                    Exhibit  4.1 on Report on Form  10-KSB for the  fiscal  year
                    ended March 27, 1994.

4.2                 Form of  Secured  Promissory  Note  payable,  New York State
                    Urban Development Corporation [Exhibit 10B to Current Report
                    on Form 8-K, dated July 22, 1992].

10.1                License Agreement  between the Company and Brevetron,  S.A.,
                    Lugano, Switzerland, dated January 1, 1979. Filed as Exhibit
                    10.1 on Report on Form  10-KSB  for the  fiscal  year  ended
                    March 27, 1994.

10.2                Amendment  to License  Agreement  between  the  Company  and
                    Brevetron,  S.A. dated September 28, 1982.  Filed as Exhibit
                    10.2 on Report on Form  10-KSB  for the  fiscal  year  ended
                    March 27, 1994.

10.3                Amendment  to License  Agreement  between  the  Company  and
                    Brevetron,  S.A. dated September 20, 1991.  Filed as Exhibit
                    10.3 on Report on Form  10-KSB  for the  fiscal  year  ended
                    March 27, 1994.

10.4                Lease for premises 140 58th Street, Brooklyn, New York 11220
                    [Exhibit A to Current Report filed on Form 8-K, dated August
                    23, 1991].

10.5                Form of Loan Agreement  between the Company and the New York
                    State Urban Development  Corporation [Exhibit 10A to Current
                    Report filed on Form 8-K, dated July 22, 1992].

10.6                Form of Security  Agreement  between the  Registrant and New
                    York State Urban  Development  Corporation  [Exhibit  10C to
                    Current Report filed on Form 8-K, dated July 22, 1992].
<PAGE>

10.7                Form of financing  agreement between the Company and Milberg
                    Factors,  Inc.  [Exhibit C-1 to the Current  Report filed on
                    Form 8-K,  dated  March 1,  1990]. 

10.8                Form of Collective  Bargaining Agreement between Company and
                    Local 259 of the United Auto Workers Union, dated October 1,
                    1991.

10.9                Form of  Employment  Agreement  between  Company and Michael
                    Offerman  together  with  Amendment  No.  1  dated  November
                    27,1997. [filed as Exhibit 10.9 to Form 10KSB for the fiscal
                    year ended March 28, 1997]

10.10               Form of Employment  Agreement  between the Company and Ralph
                    Acello   together  with   Amendment  No.  1  dated  November
                    27,1997.[filed as Exhibit 10.10 to Form 10KSB for the fiscal
                    year ended March 28, 1997]

10.11               Form of Employment  Agreement between the Company and Robert
                    Knoth   together  with   Amendment  No.  1  dated   November
                    27,1997.[filed as Exhibit 10.11 to Form 10KSB for the fiscal
                    year ended March 28, 1997]

10.12               Form of  Employment  Agreement  between the Company and Joan
                    Prideaux.  [filed  as  Exhibit  10.12 to Form  10KSB for the
                    fiscal year ended March 28, 1997]

11.                 Statement re:Computation of per share earnings

21.                 Subsidiaries: None

23.1*               Consent of Jerome Rosenberg CPA,  independent auditor of the
                    Company

27*                 EDGAR Financial Date Schedule

99.1                Stipulation  and Escrow  Agreement  dated  December 18, 1997
                    between  the   Company   and  New  York  Urban   Development
                    Corporation  together  with  Stipulation,  Consent and Final
                    Judgement.[filed  as  Exhibit  99.1 to Form  10-QSB  for the
                    quarter ended December 26, 1997]

                          -----------------------------

<PAGE>
ITEM 7-           FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                                 IEH CORPORATION

                                    CONTENTS

                        March 27, 1998 and March 28, 1997



                                                                 



                                                                         Page
                                                                         ----

         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT                F-1 


         FINANCIAL STATEMENTS:


         BALANCE SHEETS                                                   F-2  

         STATEMENTS OF OPERATIONS                                         F-4  

         STATEMENTS OF STOCKHOLDERS' EQUITY                               F-5 

         STATEMENTS OF CASH FLOWS                                         F-6  


         NOTES TO FINANCIAL STATEMENTS                                    F-8 



<PAGE>


                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT





Board of Directors
IEH Corporation


I have audited the  accompanying  balance sheets of IEH  Corporation as of March
27,  1998  and  March  28,  1997  and  the  related  statements  of  operations,
stockholders'  equity  and cash  flows for each of the two  years in the  period
ended March 27, 1998 and March 28,  1997.  These  financial  statements  are the
responsibility of the Company's  management.  My responsibility is to express an
opinion on these financial statements based upon my audit.

I conducted my audits in accordance with generally accepted auditing  standards.
Those  standards  require the I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the financial  position of IEH  Corporation as of March 27,
1998 and March 28, 1997 and the results of its operations and its cash flows for
each of the two years in the period  ended  March 27, 1998 and March 28, 1997 in
conformity with generally accepted accounting principles.



                                                                               
/s/Jerome Rosenberg, CPA, P.C.
------------------------------
Jerome Rosenberg, CPA, P.C.


Syosset, New York
May 28, 1998


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                                 IEH CORPORATION

                                 BALANCE SHEETS
                     As of March 27, 1998 and March 28, 1997



                                                         March 27,      March 28,
                                                           1998           1997
                                                        ----------     ----------
                           ASSETS

<S>                                                     <C>            <C>       
CURRENT ASSETS:
 Cash                                                   $   19,454     $   15,274
 Accounts receivable, less allowance for
   doubtful accounts of $10,062 at March 27, 1998
   and March 28, 1997                                      838,721        651,873
 Inventories (Note 2)                                      949,282      1,107,100
 Prepaid expenses and other current assets (Note 3)         38,224         52,629
 Other receivables                                            --           30,492
                                                        ----------     ----------

         Total current assets                            1,845,681      1,857,368
                                                        ----------     ----------

PROPERTY, PLANT AND EQUIPMENT, less
   accumulated depreciation and amortization of
   $4,504,267 at March 27, 1998 and $ 4,238,093
   at March 28, 1997 (Note 4)                            1,405,625      1,480,841
                                                        ----------     ----------

OTHER ASSETS:
  Prepaid pension cost                                      43,949         43,949
  Other assets                                              47,429         47,798
                                                        ----------     ----------
                                                            91,378         91,747
                                                        ----------     ----------

         Total assets                                   $3,342,684     $3,429,956
                                                        ==========     ==========

</TABLE>


                 See accompanying notes to financial statements

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                   IEH CORPORATION

                                    BALANCE SHEETS
                       As of March 27, 1998 and March 28, 1997


                                                          March 27,         March 28,
                                                            1998              1997
                                                        -----------      -----------

           LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                  <C>                <C>              <C>        
CURRENT LIABILITIES:
 Accounts receivable financing (Note 5)                 $   656,015      $   536,457
 Notes payable, current portion (Note 7)                     56,000            1,789
 Loans payable, current portion (Note 8)                     48,530           45,710
 Accrued corporate income taxes                              15,332            8,217
 Union pension and health & welfare,
      current portion (Note 7)                              120,000          120,000
 Accounts payable                                           722,957        1,074,903
 Other current liabilities (Note 6)                         124,026          131,835
                                                        -----------      -----------

         Total current liabilities                        1,742,860        1,918,911
                                                        -----------      -----------

LONG-TERM LIABILITIES:
 Pension plan payable (Note 10)                             516,966          516,966
 Notes payable, less current portion (Note7)                132,558             --
 Loan payable, less current portion (Note 8)                184,440          240,206
 Union pension & health & health & welfare,
     less current portion (Note11)                          110,827          194,491
                                                        -----------      -----------
         Total long-term liabilities                        944,791          951,663
                                                        -----------      -----------

         Total liabilities                                2,687,651        2,870,574
                                                        -----------      -----------

STOCKHOLDERS' EQUITY:
 Common stock, $.50 par value;
 10,000,000 shares authorized, 2,303,502 shares
 issued and outstanding                                   1,151,751        1,151,751
Capital in excess of par value                            1,615,874        1,615,874
Retained earnings (Deficit)                              (2,112,592)      (2,208,243)
         Total stockholders' equity                         655,033          559,382
                                                        -----------      -----------

         Total liabilities and stockholders' equity     $ 3,342,684      $ 3,429,956
                                                        ===========      ===========



</TABLE>
                    See accompanying notes to financial statements

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                 IEH CORPORATION

                             STATEMENT OF OPERATIONS




                                                              Years Ended
                                                      --------------------------
                                                       March 27,       March 28,
                                                         1998            1997
                                                      ----------      ----------

<S>                       <C>                         <C>             <C>       
REVENUES, net sales (Note 12)                         $4,750,099      $4,729,277
                                                      ----------      ----------

COSTS AND EXPENSES:
  Cost of products sold                                3,424,932       3,433,704
  Selling, general and administrative                    835,025         760,432

  Interest expense                                       116,104         149,735
  Depreciation and amortization                          268,173         272,894
                                                      ----------      ----------
                                                       4,644,234       4,616,765
                                                      ----------      ----------

OPERATING INCOME (LOSS)                                  105,865         112,512

OTHER INCOME                                               1,131           1,414
                                                      ----------      ----------

INCOME BEFORE INCOME TAXES                               106,996         113,926
PROVISION FOR INCOME TAXES                                11,345           8,217
                                                      ----------      ----------

NET INCOME                                            $   95,651      $  105,709
                                                      ==========      ==========

Basic and Diluted Earnings per common share 
(Note 1)                                              $     .042      $     .046
                                                      ==========      ==========


Weighted average number of common shares
     outstanding  (in thousands)                           2,304           2,304
                                                      ==========      ==========

</TABLE>
                 See accompanying notes to financial statements

                                      F-4

<PAGE>
<TABLE>
<CAPTION>
                                            IEH CORPORATION

                                  STATEMENTS OF STOCKHOLDERS' EQUITY
                         For the Years Ended March 27, 1998 and March 28, 1997




                                                                           Capital in       Retained
                                                  Common Stock              Excess of       Earnings
                                             Shares          Amount         Par Value      (Deficit)
                                            ---------     -----------     -----------     ----------- 
<S>                                         <C>           <C>             <C>             <C>         
Balances, March 29, 1996                    2,303,502     $ 1,151,751     $ 1,615,874     $(2,313,952)

Net income: Year ended March 28, 1997                                                         105,709
                                            ---------     -----------     -----------     ----------- 
                                                                                          
Balances, March 28, 1997                    2,303,502       1,151,751       1,615,874      (2,208,243)

Net income: Year ended March 27, 1998                                                          95,651
                                            ---------     -----------     -----------     ----------- 
                                                                          
Balances, March 27, 1998                    2,303,502     $ 1,151,751     $ 1,615,874     $(2,112,592)
                                            =========     ===========     ===========     ===========

</TABLE>

                 See accompanying notes to financial statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                    IEH CORPORATION

                                STATEMENT OF CASH FLOWS
                              Increase (Decrease) in Cash


                                                                  Years Ended
                                                            ------------------------
                                                            March 27,      March 28,
                                                              1998           1997
                                                            ---------      ---------
<S>                                                         <C>            <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                               $  95,651      $ 105,709
                                                            ---------      ---------
   Adjustments to reconcile net income to
     net cash used in operating activities:

   Depreciation and amortization                              268,173        272,894

Changes in assets and liabilities:
  (Increase) decrease in accounts receivable                 (186,848)       209,230
  (Increase) decrease in inventories                          157,818        (90,828)
  (Increase) decrease in prepaid expenses and
      other current assets                                     14,405          1,371
  (Increase) Decrease in other receivables                     30,492         30,918
   Decrease in other assets                                       369            712


  (Decrease) increase in accounts payable                    (351,946)       (23,021)
  (Decrease) increase in other current liabilities             (7,809)       (23,940)
  Increase (decrease) in accrued corporate income taxes         7,115        (20,847)
  (Decrease) in due to union pension & health & welfare       (83,664)       (88,610)
                                                            ---------      ---------

                           Total adjustments                 (151,895)       267,879
                                                            ---------      ---------

NET CASH PROVIDED BY  (USED FOR)
   OPERATING ACTIVITIES                                       (56,244)       373,588
                                                            ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchases of fixed assets                                  (192,957)      (215,762)
                                                            ---------      ---------

                NET CASH USED IN INVESTING ACTIVITIES        (192,957)      (215,762)
                                                            ---------      ---------

</TABLE>
                 See accompanying notes to financial statements


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                                   IEH CORPORATION

                               STATEMENT OF CASH FLOWS
                             Increase (Decrease) in Cash



                                                           March 27,      March 28,
                                                             1998           1997
                                                          ---------      ---------
<S>                                                       <C>            <C>       
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on notes payable                     $ (49,231)     $  (2,753)
  Increase in notes payable                                 236,000           --
  Proceeds from accounts receivable financing               119,558           --
  Principal payments on accounts receivable financing          --         (106,923)
  Principal payments on loan payable                        (52,946)       (36,292)
                                                          ---------      ---------

NET CASH PROVIDED BY (USED IN)
   FINANCING ACTIVITIES                                     253,381       (145,968)
                                                          ---------      ---------

INCREASE IN CASH                                              4,180         11,858


CASH, beginning of period                                    15,274          3,416
                                                          ---------      ---------

               CASH, end of period                        $  19,454      $  15,274
                                                          =========      =========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION

     Interest expense                                     $ 116,104      $ 149,735
                                                          =========      =========

     Income Taxes                                         $  11,345      $   8,217
                                                          =========      =========

</TABLE>

                   See accompanying notes to financial statements

                                      F-7
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMEMTS




Note 1-          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                 Description of Business

                 The Company is engaged in the design, development,  manufacture
                 and distribution of high performance electronic printed circuit
                 connectors and specialized  interconnection devices. Electronic
                 connectors  and  interconnection  devices are used in providing
                 electrical connections between electronic component assemblies.
                 The Company  develops  and  manufactures  connectors  which are
                 designed for a variety of high technology and high  performance
                 applications,  and are  primarily  utilized  by those users who
                 require  highly   efficient  and  dense  (  the  space  between
                 connection pins with the connector) electrical connections.

                 The  Company  is  continuously  redesigning  and  adapting  its
                 connectors  to meet  and keep  pace  with  developments  in the
                 electronics   industry,   and  has,  for   example,   developed
                 connectors  for  use  with  flex-circuits  now  being  used  in
                 aerospace   programs,   computers,   air-borne   communications
                 systems,  testing  systems and other  areas.  The Company  also
                 services its connectors to meet specified product requirements.

                 Accounting Period

                 The Company  maintains an accounting  period based upon a 52-53
                 week year which ends on the nearest  Friday in business days to
                 March 31. The years  ended  March 27,  1998 and March 28,  1997
                 were comprised of 52 weeks.

                 Revenue Recognition

                 Revenues are  recognized  at the shipping date of the Company's
                 products.


                 Inventories

                 Inventories are stated at cost, on a first-in, first-out basis,
                 which does not exceed market value.


                 Concentration of Credit Risk

                 The Company  maintains  cash  balances at one bank.  Amounts on
                 deposit   are  insured  by  the   Federal   Deposit   Insurance
                 Corporation  up  to  $100,000  in  aggregate.   There  were  no
                 uninsured balances at either March 27, 1998 or March 28, 1997.

                                      F-8
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



Note 1-          SUMMARY OF SIGNIFICIANT ACCOUNTING POLICIES (continued)


                 Property, Plant and Equipment

                 Property,   plant  and   equipment   is  stated  at  cost  less
                 accumulated depreciation and amortization. The Company provides
                 for  depreciation  and  amortization  using  the  straight-line
                 method over the  estimated  useful  lives  (3-10  years) of the
                 related assets.

                 Maintenance and repair  expenditures are charged to operations,
                 and  renewals  and  betterments  are   capitalized.   Items  of
                 property,  plant  and  equipment  which are  sold,  retired  or
                 otherwise   disposed  of  are   removed   from  the  asset  and
                 accumulated  depreciation or  amortization  account any gain or
                 loss thereon is either credit or charged to operations.


                 Income Taxes

                 The  Company  follows  the policy of  treating  investment  tax
                 credits as a reduction in the provision for federal  income tax
                 in the year in which  the  credit  arises  or may be  utilized.
                 Deferred   income  taxes  arise  from   temporary   differences
                 resulting   from  different   depreciation   methods  used  for
                 financial  and income tax  purposes.  The  Company  has adopted
                 Statement   of   Financial   Accounting   Standards   No.  109,
                 "Accounting for Income Taxes".


                 Net Income Per Share

                 For the year ended  March 27,  1998,  the  Company  adopted the
                 provisions  of  SFAS  No.  128,  "Earnings  Per  Share",  which
                 requires  the  disclosure  of "basic"  and  "diluted"  earnings
                 (loss) per  share.  Basic  earnings  per share is  computed  by
                 dividing  net income by the weighted  average  number of common
                 shares  outstanding  during each period.  Diluted  earnings per
                 share is similar to basic  earnings  per share  except that the
                 weighted  average  number  of  common  shares   outstanding  is
                 increased  to reflect the dilutive  effect of potential  common
                 shares,  such as those  issuable  upon the exercise of stock or
                 warrants, as if they had been issued. For the years ended March
                 27, 1998 and March 28, 1997, there were no differences  between
                 basic and diluted earnings per share.


                 Fair Value of Financial Instruments

                 The  carrying  value of the  Company's  financial  instruments,
                 consisting  of  accounts  receivable,   accounts  payable,  and
                 borrowings, approximate their fair value.

                                      F-9
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



Note 1-          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


                 Use of Estimates

                 The  preparation  of financial  statements in  conformity  with
                 generally accepted accounting principles requires management to
                 make estimates and assumptions that affect the reported amounts
                 of  assets  and   liabilities,   revenues  and  expenses,   and
                 disclosure of contingent  assets and liabilities at the date of
                 the  financial  statements.  Actual  amounts  could differ from
                 those estimates.


                 Impairment of Long-Lived Assets

                 SFAS No. 121,  "Accounting  For the  Impairment  of  Long-Lived
                 Assets To Be Disposed Of",  requires that long-lived assets and
                 certain  identifiable  intangibles  to be held  and  used by an
                 entity be reviewed for impairment whenever events or changes in
                 circumstances indicate that the carrying amount of an asset may
                 not be recoverable.  The Company has adopted SFAS 121 effective
                 March 27,  1998.  There was no impact of such  adoption  on the
                 Company's financial condition and results of operations.


                 Effect of New Accounting Pronouncements

                 In  June  1997,  the  FASB  issued  SFAS  No.  130,  "Reporting
                 Comprehensive Income". This statement established standards for
                 reporting   and  display  of   comprehensive   income  and  its
                 components  (revenues,   expenses,  gains  and  losses)  in  an
                 entity's  financial  statements.  This  Statement  requires  an
                 entity to classify items of other comprehensive income by their
                 nature in a financial  statement  and  display the  accumulated
                 balance of other comprehensive  income separately from retained
                 earnings and additional  paid-in  capital in the equity section
                 of a statement of financial  position.  This  pronouncement  is
                 effective for fiscal years  beginning  after  December 15, 1997
                 and the Company expects to adopt the provision statement in the
                 fiscal year ending March 26, 1999.  Management  does not expect
                 this statement to significantly  impact the Company's financial
                 statements.

                                      F-10
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 1-          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

                 Effect of New Accounting Pronouncements (continued)

                 In June 1997,  the FASB issued SFAS No. 131,  Disclosure  About
                 Segment  Of  An  Enterprise  and  Related  Information".   This
                 statement  requires public  enterprises to report financial and
                 descriptive information about its reportable operating segments
                 and establishes standards for related disclosures about product
                 and  services,  geographic  areas,  and major  customers.  This
                 pronouncement  is effective  for fiscal years  beginning  after
                 December  15,  1997  and  the  Company  expects  to  adopt  the
                 provisions  of this  statement  in the fiscal year ending March
                 26,  1999.   Management  does  not  expect  this  statement  to
                 significantly impact the Company's financial statements.

                 In April 1998,  the  American  Institute  of  Certified  Public
                 Account's   Accounting  Standards  Executive  Committee  issued
                 Statement  of Position  (SOP) 98-5, " Reporting On The Costs Of
                 Start-Up  Activities".  The SOP,  which is effective for fiscal
                 years   beginning   after   December   15,  1998  with  earlier
                 application  encouraged,  requires entities to expense start-up
                 costs and  organization  costs for establishing new operations.
                 Management  does not expect  this  statement  to  significantly
                 impact the Company's financial statements.

Note 2-          INVENTORIES:

                 Inventories are comprised of the following:

                                      March 27,      March 28,
                                        1998           1997
                                     ----------     ----------
                 Raw materials       $  651,975     $  791,452
                 Work in process         99,523         37,476
                 Finished goods         197,784        278,172
                                     ----------     ----------

                                     $  949,282     $1,107,100
                                     ==========     ==========

Note 3-          PREPAID EXPENSES AND OTHER CURRENT ASSETS:

                 Prepaid  expenses and other current assets are comprised of the
                 following:

                                          March 27,    March 28,
                                            1998         1997
                                          -------     ------- 
                  Prepaid insurance        $34,356     $48,054
                  Other current assets       3,868       4,575
                                           -------     -------
                                           $38,224     $52,629
                                           =======     =======

                                      F-11
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 4-          PROPERTY, PLANT AND EQUIPMENT:

                 Details of property, plant and equipment are as follows:

                                                      March 27,      March 28,
                                                        1998           1997
                                                     ----------     ----------

 Leasehold improvements                              $  568,006     $  568,006
 Machinery and equipment                              3,810,971      3,714,312
 Tools and dies                                       1,370,899      1,276,600
 Furniture and fixtures                                 148,770        148,770
 Transportation equipment                                11,246         11,246
                                                     ----------     ----------

                                                      5,909,892      5,718,934

 Less: accumulated depreciation and amortization      4,504,267      4,238,093
                                                     ----------     ----------

                                                     $1,405,625     $1,480,841
                                                     ==========     ==========

Note 5-          ACCOUNTS RECEIVABLE FINANCING:

                 The  Company  entered  into an  accounts  receivable  financing
                 agreement  whereby  it can  borrow up to eighty  percent of its
                 eligible  receivables  ( as  defined  in the  agreement)  at an
                 interest  rate  of 2 1/2%  above  The  Chase  Manhattan  Bank's
                 publicly  announced  rate  (8.50%)  at March 27,  1998,  with a
                 maximum of 12% per annum.  The agreement has an initial term of
                 one year and will  automatically  renew for successive one year
                 terms,   unless  terminated  by  the  Company  or  Lender  upon
                 receiving sixty days prior written notice.  The loan is secured
                 by the Company's accounts receivable and inventories.


Note 6-          OTHER CURRENT LIABILITIES:

                 Other current liabilities are comprised of the following:

                                              March 27,    March 28,
                                                1998         1997
                                              --------     --------

            Payroll and vacation accruals     $ 28,300     $ 12,817
            Sales commissions                    9,574        9,591
            Pension plan payable                65,489       65,489
            Other                               20,663       43,938
                                              --------     --------
                                              $124,026     $131,835
                                              ========     ========

                                      F-12
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 7-          NOTES PAYABLE:

                 The Company was in arrears in the amount of $236,000 to the New
                 York City Economic Development  Corporation ("NYCEDC") for rent
                 due for its offices and manufacturing  facilities. In May 1997,
                 the  Company and the NYCEDC  negotiated  an  agreement  for the
                 Company to pay off its indebtedness  over a 48 month period, by
                 the Company  issuing  notes  payable to NYCDEC.  The notes bear
                 interest at the rate of 8.25% per annum. The balance  remaining
                 at March 27, 1998 was $188,558,  with $56,000 being reported as
                 a current  liability  and the  remainder  being  reported  as a
                 long-term liability.

Note 8-          LOAN PAYABLE:

                 On July 22, 1992, the Company  obtained a loan of $435,000 from
                 the New  York  State  Urban  Development  Corporation  ("UDC"),
                 collateralized by machinery and equipment.  The loan is payable
                 over ten years,  with interest rates  progressively  increasing
                 from 4% to 7% per annum.

                 The balance remaining at March 27, 1998 was $232,970..

                 Aggregate future principal payments are as follows:

                  Fiscal Year Ending March:
                           1999                                $ 48,530
                           2000                                  50,693
                           2001                                  54,289
                           2002                                  58,795
                           Thereafter                            20,663
                                                               --------
                                                               $232,970
                                                               ========

                 In April 1997,  the  Company  was  informed by the UDC that the
                 loan was sold and  conveyed to WAMCO XXIV,  Ltd.  All the terms
                 and conditions of the loan remained in effect.

                 As of March 27, 1998, the Company had failed to meet one of the
                 financial  covenants  of the loan  agreement;  namely  that the
                 "Company shall be obligated to maintain a tangible net worth of
                 not less than  $1,300,000 and the Company shall be obligated to
                 maintain a ratio of current  assets to current  liabilities  of
                 1.1 to 1.0.

                 The Company reported tangible net worth of $655,033.  The ratio
                 of current assets to current liabilities was 1.1 to 1.0.

                 The  Company  has  applied  for  additional   waivers  of  this
                 covenant.  Neither  the UDC or WAMCO  XXIV  has  acted on these
                 requests. There are no assurances that the Company will receive
                 any additional waivers of this covenant. Should the Company not
                 receive any additional waivers, then it will be deemed to be in
                 default  of this  loan  obligation  and the  entire  loan  plus
                 interest will become due and payable.

                                      F-13
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 9-          INCOME TAXES:

                 The Company has available at March 27, 1998, for federal income
                 tax purposes, a net operating loss of approximately  $2,034,000
                 of which approximately  $1,300,000 will expire in 2007 with the
                 balance in 2010. In addition, the Company has unused investment
                 tax credits of approximately  $86,000 which expire between 1998
                 and 2002.

Note 10-         PENSION PLAN-SALARIED PERSONNEL:

                 On June 30, 1995,  the Company  applied to the Pension  Benefit
                 Guaranty  Corporation  ("PBGC")  to have the PBGC assume all of
                 the  Company's   responsibilities  and  liabilities  under  its
                 Salaried  Pension Plan. On April 26, 1996, the PBGC  determined
                 that the Salaried  Pension Plan did not have sufficient  assets
                 available  to pay  benefits  which were and are  currently  due
                 under the  terms of the  Plan.  PBGC  further  determined  that
                 pursuant to the provisions of the Employment  Retirement Income
                 Security Act of 1974, as amended  ("ERISA")  that the Plan must
                 be  terminated  in order to protect the interests of the Plan's
                 participants. Accordingly, the PBGC proceeded pursuant to ERISA
                 to have the Plan terminated and the PBGC appointed as statutory
                 trustee,  and to have July 31, 1995  established  as the Plan's
                 termination date.

                 The PBGC has advised  the Company  that since the assets of the
                 Plan are  combined  with the assets of other plans and invested
                 by the Financial Operations Department of the PBGC, it does not
                 invest or track the assets separately by plan. Accordingly, the
                 PBGC was unable to provide any  financial  data relative to the
                 Plan,  including  return on investments,  unrecognized  gain or
                 loss or other  information  regarding  the Plan assets at March
                 27, 1998.

                 At March 27,  1998 and March 28,  1997,  $65,389 of the pension
                 liability is included in other  current  liabilities,  with the
                 balance of $516,966  shown as a long-term  liability.  At March
                 27, 1998 and March 28, 1997,  the  long-term  portion  includes
                 $226,041,  which  represents the  recognition of the additional
                 minimum  liability to comply with the requirements of Statement
                 of Financial Accounting Standards No.87.

Note 11-         COMMITMENTS:

                 The Company had entered into employment  agreement with certain
                 of  its  officers.   The  agreements  provided  for  retirement
                 compensation  of  $30,000  per annum for a period of five years
                 upon  reaching  either  age  65,  death,  total  disability  or
                 employment terminated by mutual consent between the Company and
                 the respective officer. Prior to March 26, 1993, all but one of
                 these agreements had expired.  The remaining  agreement is with
                 the President of the Company.

                                      F-14
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 11-         COMMITMENTS (continued)

                 On August 23, 1993,  the Company  entered into a lease with the
                 New York City Economic  Development  Corporation for its office
                 and  manufacturing  facilities.  The Company is obligated under
                 this lease through September 1, 2001, at minimum annual rentals
                 as follows:

                           Fiscal Year Ending::

                           1999                                $194,236
                           2000                                 194,236
                           2001                                 274,630
                                                               --------

                                                               $663,102
                                                               ========

                 Net rental  expense  for the year ended March 27, 1998 for this
                 lease was $210,041.

                 (See Note 7- Notes Payable relating to rent arrears agreement)

                 The Company has with the United Auto Workers of America,  Local
                 259,  a  collective  bargaining  multi-employer  pension  plan.
                 Contributions  are made in accordance  with a negotiated  labor
                 contract  and are  based on the  number  of  covered  employees
                 employed  per month.  With the  passage  of the  Multi-Employer
                 Pension Plan  Amendments  Act of 1990 ("The Act"),  the Company
                 may become subject to  liabilities  in excess of  contributions
                 made  under the  collective  bargaining  agreement.  Generally,
                 these   liabilities  are  contingent   upon  the   termination,
                 withdrawal,  or partial  withdrawal  from the Plan. The Company
                 has not taken any action to  terminate,  withdraw or  partially
                 withdraw  from  the Plan  nor  does it  intend  to do so in the
                 future.  Under  the Act,  liabilities  would be based  upon the
                 Company's  proportional  share of the  Plan's  unfunded  vested
                 benefits  which is  currently  not  available.  The  amount  of
                 accumulated  benefits  and net  assets of such Plan also is not
                 currently  available  to the Company.  The total  contributions
                 charged to operations  under this pension plan were $40,176 for
                 the year ended  March 27,  1998 and  $42,140 for the year ended
                 March 28, 1997.

                 As of March 27, 1998, the Company reported arrears with respect
                 to its  contributions  to the  Union's  health and  welfare and
                 pension  plans.  The amount due the health and welfare plan was
                 $155,189 and the amount due the pension plan was $75,638.

                 The  total   amount  due  of   $230,827   is  reported  on  the
                 accompanying balance sheet in two components; $120,000 reported
                 as a current liability and $110,827 as a long-term liability.

                                      F-15
<PAGE>
                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 11-          COMMITMENTS (continued)

                  In December  1993,  the  Company and Local 259 entered  into a
                  verbal  agreement  whereby the Company would satisfy this debt
                  by the following payment schedule:

                  The sum of $10,000  will be paid by the Company  each month in
                  satisfaction  of the current arrears until this total debt has
                  been  paid.  Under  this  agreement,   the  projected  payment
                  schedule for arrears will satisfy the total debt in 52 months.
                  Additionally, both parties have agreed that current obligatory
                  funding by the Company will be made on a timely current basis.


Note 12-          REVENUES FROM MAJOR CUSTOMERS:

                   In the fiscal year ended March 27, 1998, more than 30% of the
                  Company's  total  revenues  were earned from three  customers.
                  Total sales to these customers were approximately  $1,428,000.
                  Individually,  sales to these three  customers  were $376,000,
                  $497,000 and $555,000.

                                      F-16